Will Local Hiring Change the Mission?

Starting this Friday, any contract for a city-financed construction project will require that construction be done by a crew made up of at least 20 percent San Francisco residents. Every year that percentage will go up by 5 percent, until it tops out at 50 percent in 2018.

What will this mean for the Mission, a neighborhood where small-time contracting businesses still throng east of Mission Street, and where construction work is often the first occupation held by recent immigrants? Under the new law, anyone who can prove they have lived in the city for seven days or more qualifies as a local hire.

The law will help bring lower income, minority workers from the neighborhood into better construction jobs, says Oscar Grande, an organizer at PODER, a Mission-based organization that advocates for jobs for low-income residents. “Even for documented workers here, many have been locked out by many of the building trades’ unions, from the electricians to the plumbers. You’re not going to see a reflection of what our neighborhoods look like.”

The law could potentially change a lot, says Ruben Santana. As a homegrown contractor with a crew that’s been as much as two-thirds local, he’s held the ideology that the law reinforces for years. “I still have a lot of friends in San Francisco, family in San Francisco. Those folks deserve to have jobs in their neighborhoods.”

Santana always knew he wanted to be in the construction business. “I love the craft,” he says. So after graduating from John O’Connell High School in 1981, he tried, in vain, to enter the electrician’s union.

He settled instead on carpentry. “I don’t mind swinging a hammer,” he says. “But I wanted a better, higher-class craft at the time. There was no way I was going to have that opportunity.” Santana made his way up the ranks as a carpenter, from apprentice to journeyman, foreman, then superintendent. “I knew that eventually I would head toward owning my own company.”

Today, he does. At its peak, Rubecon General Contracting employed more than 100 people, two-thirds of whom lived in San Francisco. Today, a collapsed market means he can keep only 20 workers. Still, he works out of his headquarters in the city, based in the south of Market area. “My support is still where my heart is — and that’s where I’m from, San Francisco.”

The strictest of its kind, the law aims to ensure that local workers benefit from local projects. It has not only been touted as a way to curb unemployment (which still stands at 9.5 percent, or 43,000 people, within the city’s boundaries), but also as a way to help minorities entering areas of the construction trades still dominated by whites.

Not everyone agrees that this is necessary. Michael Theriault of the San Francisco Building and Construction Trades Council points to a city-commissioned report that shows electrician and plumbing apprenticeships have minority participation at least on par with their share of the city’s population. Forty-three percent of elevator operator apprentices from San Francisco are Hispanic, Theriault writes. “There is no pattern of minority exclusion at all here.”

Theriault and others have warned officials that as the economy picks up and the unemployed pool shrinks, contractors will struggle to meet the sliding scale for local hire requirements. It’s been hypothesized that much of the opposition to the ordinance on the part of local unions is due to the fact that many members of unions headquartered in San Francisco actually live outside of the city.

That’s normal, says Tim Paulson, who heads the San Francisco Labor Council. Looking at the Bay Area in hyper-local terms doesn’t work. “We’re a regional economy and we’re looking at these small distinctions — San Francisco versus San Mateo. It’s so short-sighted to think this way.” The Labor Council did not take a position on the legislation.

Grande and Santana say that this diaspora is the nature of the Bay Area construction economy — people who have some measure of success in those skilled trades often move out. “People’s dollars stretch further when you live in Antioch or Petaluma or Tracy, compared to what you get here,” says Grande. From there, networks of friends and family can lead to the extension, and eventual dominance, of the out-of-town labor pool.

The city, for its part, has estimated that the law could increase contract costs as much as $9.3 million once fully implemented. Ted Egan, the city controller’s chief economist, says the costs would be hidden within contract bids, as vendors pad their estimates in anticipation of the added burden. And once private sector construction jobs pick up again, city contractors may have to bump up wages to attract laborers on public projects, or face a penalty.

But Egan also says the city is working toward policies that will mediate those costs. Guillermo Rodriguez, who’s been charged with implementing the law across the city’s agencies, says it has made applying for city contracts less expensive for bidders by thinning the paper chase and streamlining the process. An increased reliance on payroll technology services will also allow the city to monitor local hiring levels for city contractors efficiently and cost-effectively. It will also help the city assess which areas of the building trades are underrepresented locally, so it can take steps to change that.

“We’re really building a pipeline of San Francisco residents who can meet or exceed any entry requirements for any craft in the future,” says Rodriguez.

The bottom line, Egan says, won’t be the holy grail for the unemployed — job creation is pegged at 350 after the law is fully implemented. It’s a paltry number compared to the 43,000 currently out of work in the city.

“Any time you have a policy like this, there’s the winners,” Egan says. That will be the 350 people taking home paychecks thanks to city-funded construction — and the businesses in the neighborhoods where they live and shop. The $9.3 million in estimated costs to the city comes out to $26,571 per job, which raises the question: Is this an investment that will pay off in the long run?

It will, says Rodriguez. The city estimates that the measure could generate in excess of $144 million in revenue, from increased taxes on both income and the goods and services bought with those incomes.

Grande says he doesn’t need to look at the bottom line to know that local hire will be good for the neighborhood. “I look at it in the holistic sense. These are workers that are now building toward a lifelong career. Their chances of being incarcerated are greatly reduced. Their chances of falling victim to some kind of crime are greatly reduced. To me, it’s an investment that’s going to keep paying forward.”

This seems long on ideology and short on practical effect. Having “resided” in SF for one week is such a low bar, and virtually impossible to either prove or disprove, that I don’t see much of an effect either way.

Thanks so much for pointing that out, it’s something I missed in this article. For the purposes of this law, a resident is defined as someone who lives in the city 7 days prior to starting work on the project. Whether that will actually achieve the goal of helping the local economy is open for interpretation.

First how do you think this is going to shake out when there is significant legal challenge on the grounds of discrimination? Eventually the work force may look like San Francisco but it will not look like Oakland or the demographic composition of a particular segment of the regional work force. How many people in the Mission work outside the city in government project jobs? If this is legal for government projects than why not a quota for government jobs period? Should San Francisco be the only Government to have such a Law? Do you think it will benefit the Mission if the County of San Mateo passes such a law? This law is exclusionary if its legal here than what is there to prohibit other local Governments from passing laws that limit the number of San Franciscans from being employed elsewhere? Why should San Francisco be able to tap into Federal or State funds and Grants that are intended end the kind of discrimination by locality present in this law? Oh yes I forgot San Francisco is special, they can discriminate on the basis of race or national origin as long as it does so under the cover of “local jobs”.